Module 1

Revisiting Economics as a Social Science

I. Introduction

Economics is a broad ranging discipline that uses a variety of techniques that uses a variety of
techniques and approaches to address important social questions. Because of the great complexity of
human behaviour, economist are forced to abstract from many details, to make generalizations that
they know are not quite true and to organize what knowledge they have in terms of some theoretical
structure in our economy.

There three strands in the development of the definition of economics. The first focuses on
wealth. In previous decades, economics has been defined as a science of wealth-getting and wealth
using. The second stresses the decision-making process. Currently, economics is defined as a science
of making choices. The third concentrates on the allocation process. In many textbooks, economics
has been defined as a social that deals with the allocation of scare resources to meet the unlimited
human wants.

II. Learning Objectives

At the end of the lesson, the learners will be able to:
1. Define economics;
2. Determine the importance of economics
3. Describe the nature of economics

III. Knowledge Enrichment

A. Pre-Assessment

Multiple Choice: Choose the letter of the correct answer and write it down on the space provided
for in each item.

___________1. Economics is a social science because it deals with?

a. Human nature b. Natural resources
c. Experimentation d. Plants and animals
___________2. Economics is important so that we may able to?
a. Understand problems facing the citizens and family
b. Help the government promote growth and improve quality of life
c. Analyze fascinating patterns of social behaviour
d. All of the above
___________3. A study of economics can describe all aspects of a?
a. Country’s economy b. Production function
c. Consumption of individuals d. Market
___________4. Economics is a science because?
a. It can predict the future
b. It conducts experiment in a laboratory
c. It measures the quantity of output
d. It undergoes observation and experimentation

___________5. As a social science, economics can be more

 a. Predictable b. Unpredictable
c. Changeable d. All of the above

__________6. Economics is derived from Greek word “oikanomia” meaning

a. Economic management b. Household management
c. Social management d. Political management
__________7. Scarcity of resources means
a. Minimum resources b. Shortage of resources
c. Slight resources d. Excess resources
__________8. Unlimited wants mean?
a. Infinite b. Limited
c. Partial d. Watch
__________9. These are examples of human wants except
a. Smartphone b. Clothing
c. Perfume d. Watch
_________10. Allocation of resources means
a. Apportionment of resources b. Stocking resources
c. Keeping resources d. Protection of resources

Review
Picture Analysis
Based on the picture below you need to identify each picture and write your own ideas or
understanding on the space provided.

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C. Lesson Proper
 ECONOMICS
Economics may appear to be the study of complicated
tables and charts, statistics and numbers, but, more specifically,
it is the study of what constitutes rational human behavior in
the endeavor to fulfil needs and wants.

Economics has been defined defined in many ways. It

comes from the Greek word “oikanomia” meaning “household
management.”

But, when you hear Economics what comes to your mind?

Some of these definitions are as follows:

1. According to Fajardo, economics is the proper allocation
and efficient use of available resources for the maximum satisfac
-tion of human wants.
2. Samuelson states that economics is the study of how
societies use scarce resources to produce valuable commodities
and distribute them among different people.
3. Economics, according to Nordhaus, is the science of choice. It studies how peopl0e choose to
use scarce resources or limited productive resources (labor, equipment, technical, knowledge) to
produce various commodities and to distribute these commodities for consumption.
4. Sicat defined economics as scientific study which deals with how individuals and society in
general make choices.
5. Castillo viewed economics as the study of how man could best allocate and utilize the
scarce resources of society to satisfy his unlimited want.
6. Webster defined economics as a branch of knowledge that deals with the production,
distribution and consumption of goods and services.

Importance of Economics
Many individuals have no clear understanding of what economics. They don’t even know how
it works and how it affects their lives. People just don’t mind what economics can give to them.

Actually, every individual cannot isolate himself from economics. This brought about the mere
fact that this physical existence in this world depends upon economics. People cannot live without
production and consumption. Almost always, human activities involve economics. For instance,
earning money, buying goods and services, depositing and withdrawing money in the bank, these are
all economic activities.

Furthermore, economics is important in order to understand problems facing the citizen and the
family; help government promote growth and improve the quality of life while avoiding depression
and inflation and to analyse fascinating patterns and social behavior. Because economic questions
enter into both daily life and national issues, a basic understanding of economics is vital for sound
decision making by individuals and chain.

The Nature of Economics

 Economics is a Science – A science is a body of systematic knowledge built upon by conscious
efforts. Like any other science, its laws and principles are arrived at only after a long series
observations and experimentations. The body of knowledge is made up of different explanations. An
explanation of a certain event called a theory.
Economic, as a social science – is the study of the relations between people during the
production, distribution and consumption of wealth in human society. In other words, economics is
the study of the relationship established in the production and consumption of goods and the transfer
of wealth to produce and obtain those goods among people.

Of the social sciences, Economics has more advantages as a scientific discipline for two major reasons:
1. Economic motivates of human beings may be more regular and therefore persistent. They
can be more predictable.
2. There more factual information in the form of statistics. This gives a substantial basis for the
verification and formation of alternative economic theories.

Macroeconomics and Microeconomics

The study of Economics is divided into two branches: Macroeconomics and Microeconomics.

Macroeconomics – deals with economic behavior of the whole economy or its aggregates such
as government, business and households. Concerned with the discussion of topics like gross national
product, level of employment, national income, general level of prices, total expenditures, etc. It is
also known as employment and income analysis.
Microeconomics – Microeconomics with the economic behavior of individual units such as the
consumers, firms, and the owners of the factors of production. Such specific economic units
constitute a very small segment of the whole economy.

Divisions of Economics
Economics has five major divisions. These divisions are as follows:

1. Production – This refers to the process of producing or creating goods needed by the households to
satisfy their needs. The factors of production are called inputs and the goods and services that have
been created are called outputs of production.
2. Distribution – This refers to the marketing of goods and services to different economic outlets fo
allocation to individual consumers. In monetary terms, this is the allocation of income among persons
or household.
3. Exchange – This is a process of transferring goods and services to a person in return for something.
At present, the medium of exchange used in the market is money. This means, we can exchange our
money with goods and services.
4. Consumption – This refers to the proper utilization of economic goods. However, goods and
services could not be utilized unless you pay for it.
5. Public Finance – This pertains to the activities of the government regarding taxation, borrowings,
and expenditures. It deals with the efficient use and fair distribution of public resources in order to
achieve maximum social benefits. This means, government programs and projects which are funded
by taxes and loans are properly implemented and managed to generate maximum and optimum
benefits for all members of society.

Tools of Economics
 Most economist are engaged in analyzing the present economic situation of the country. Most
of these economist use different scientific approaches and utilize different tools to be able to
formulate theories and principles.
Some of the major tools used by these economist are the following:
1. Logic – It is a science that deals with sound thinking and the reasoning. In the process of reasoning,
facts and proofs should be presented; otherwise, such reasoning will be clouded by an iota of doubt.
With the wise application of logic, one may be able to arrive at a conclusion.
2. Mathematics – It is a science that deals with numbers and their operations. Actually, economics is
the most quantifiable discipline among social sciences. It can quantify population, income national
product, aggregate number of firms, etc. Mathematics comes hand in hand with economics.
Mathematics helps economist solve concrete problems involving numbers, such as how calculate the
profit of a firm.
3. Statistics – It is a branch of mathematics engages with the analysis and interpretation of numerical
data. It deals with the process of collecting, tabulating and analyzing data to test the validity of a
certain hypothesis. These are the facts collected and arranged in an orderly way for study. Statistics,
for example, help economist calculate a nation’s GDP or allows them to better configure a manufacturing
process to reduce cost. Statistical tools include regression and correlation analysis and calculation of
probabilities.

The Economic Resources

Our economic resources are also known as factors of production or inputs.

Five major Factors of Production

Land – These resources consist of free gifts of nature which includes all natural resources
above, on, and below the ground such as soil, rivers, lakes, oceans, forest, mountains, mineral
resources and climate. Land is considered economic resources because it has a price attached to it.
One cannot utilize this natural resource without paying for it usually in the form of rent and lease.

Labor – This is also termed as human resources. Labor refers to all human efforts, be it mental
or physical, that help to produce want satisfying goods and services. Labor is an indispensable factor
in the production of goods and services. Labor represents human capital available to transform raw
or national resources into consumer goods. Human capital includes all able-bodied individuals
capable of working in the nation’s economy and providing various services to other individuals or
businesses. Human capital can also be improved through training or educating workers to complete
technical functions or business tasks when working with other economic resources.

Capital – Capital has two economic definitions as a factor of production. Capital can represent
the monetary resources companies use to purchase natural resources, land and other capital goods.
Monetary resources flow through a nation’s economy as individuals buy sell resources to individuals
and businesses. Capital also represents the major physical assets individuals and companies use
when producing goods or services. These assets include buildings, production facilities, equipment,
vehicles and other similar items. Individuals may create their own capital production resources,
purchase them from another individual or business or lease them for a specific amount of time from
individuals or other business. income derived from capital is called interest.

Entrepreneurs – This is a French word meaning enterpriser. An entrepreneur is the organizer and
coordinator of the other factors of production: land, labor, and capital. An entrepreneur is one who is
engaged in economic undertakings and provides society with goods and services it needs. He utilizes
his initiative, talent and resourcefulness in the creation of economic goods.
 Foreign Exchange – This refers the dollar reserves that the economy has. Foreign exchange is
part of economic resources because we need foreign currency, particularly dollars for international
trading and buying of raw materials from other countries. Dollar is the international medium of
currency used in engaging business with foreign countries.

IV. Skills Development

A. Activity:

Semantic Web Map

Identify some of the problem of the country. Do the identified problems have something to do with
economics. Support your answer.

PROBLEMS

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B. Practice Exercise

Identification: Write the correct answer on the space provided.

______________1. It is also termed as human resource.
______________2. It refers to the allocation of products among the factors of production.
______________3. The simplest application of mathematics for economic analysis is found in this
field because it explains the relationship.
______________4. Engaged in economic undertakings and provides society with goods and services it
needs.
______________5. Deals with the economic behavior of individual units such as the consumers, firms,
and the owners of the factors of production.

C. Application

As student what is your view regarding to our lesson today because it is said that we cannot
solve economic problems by making economic solutions alone. If this is so, why and why not?

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D. Post-Assessment

True or False: Read the statements carefully. Write APPLIED if the statement is correct and
ECONOMICS if it is incorrect. Write your answer on the space provided.

______________1. Samuelson defined economics as the study of how man could best allocate the
scarce resources of society in general make choices.
______________2. Economic is a body of systematic knowledge built upon by conscious efforts.
______________3. Macroeconomics is concerned with the discussion of topics like gross national
product, level of employment, national income, general level of prices, total expenditures, etc.
______________4. Exchange refers to the proper utilization of economic goods.
______________5. Statistics is a branch of mathematics that engaged with the interpretation of
numerical data.

V. Character Enrichment

Reflection: What advantages does economics have over the other social sciences that study
human behavior? What does it have in common with the other social sciences? Elaborate.
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VI. References
Roman D. Leaǹo, J. (2016). Applied Economics for Senior High School. Mindshapers Co., Inc.